Violence along Israel's southern border with Egypt has flared up again, potentially heightening tensions between the two neighbors just weeks before the Egyptian military was supposed to hand over control to a new president.

Shortly before dawn today, a team of gunmen infiltrated Israel’s border with Egypt and ambushed two vehicles of Israeli Defense Ministry contractors tasked with building a border fence designed to prevent such attacks, leaving one worker dead. Two gunmen were killed in the ensuing crossfire with Israeli soldiers.

The ambush came days after a pair of Grad Katyusha rockets were fired into Israel from Sinai.

The two attacks, which coincided with Egyptian presidential elections, mark the worst border violence since last summer, when two Israelis were killed in an elaborate border ambush, and Israel killed several Egyptian soldiers. That incident touched off street riots in Cairo at the Israeli Embassy, nearly upending ties.

The violence highlights two of the Jewish state's greatest concerns about its largest neighbor: a tumultuous Egyptian political transition that may bring Islamists to power, and increasingly lax security in Egypt's sparsely populated Sinai peninsula.

“We see here a disturbing deterioration in Egyptian control in the Sinai,” said Israeli Defense Minister Ehud Barak in a statement today. “We are waiting for the results of the election. Whoever wins, we expect them to take responsibility for all of Egypt's international commitments, including the peace treaty with Israel, and the security arrangements in the Sinai; [and] swiftly putting an end to these attacks."

Will 33-year-old peace treaty hold?

Egypt's leading politicians, including the Muslim Brotherhood candidate who claimed victory in this weekend's presidential run-off, have declared they will honor the 1978 Camp David peace treaty. But there is concern that widespread turmoil will nonetheless lead to a further erosion of the ties.

Israeli officials and analysts have expressed hope that even an Egypt led by the Muslim Brotherhood will uphold the treaty because it will be focused on stabilizing Egypt’s economy.

While Israelis are uneasy about the Muslim Brotherhood because of its link to the militant Hamas group, its candidate, Mohamed Morsi, might have more grass-roots support to crack down in Sinai, says Yoav Stern, a former Arab affairs correspondent for Haaretz.

“It can go in all directions,” he says. “No matter who is elected, the relationship between Israel and Egypt is at crossroads, in the coming days and weeks we’ll know where the relationship is heading.”

Why Israel hasn't retaliated in Sinai

No militant group has claimed responsibility for today's attack on the Israeli Defense ministry contractors. But the militants behind it were likely linked to jihadist groups outside of Egypt who want to drive a wedge between the two countries by provoking Israel to send troops to Sinai in violation of the peace treaty, says Eli Shaked, a former Israeli ambassador to Egypt.

“This is their dream,” he said. “They would like very much to lead Israel to make a grave mistake.”

Because of the peace treaty, Israel is loath to retaliate in Sinai, even though it suspects militant groups have free rein. As a result the Israeli military has little recourse but to bulk up its defenses along the 150-mile border, such as rushing the completion of a border fence and bulking up patrols.

Several hours after today's attack, the Israeli military launched two strikes in the Gaza Strip amid suspicions that militants from the Palestinian territory may have been involved in the Sinai attacks. An Israeli military spokesperson denied that the attacks in Gaza – which targeted Islamic Jihad members – were linked to the border attack, but the Israeli online news service Ynet quoted an anonymous cabinet minister accusing militants from Islamic Jihad of carrying out the attack.